Bitcoin Lightning Network Explained (+ Insane 1 Year Growth)

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Business Owner's Seething Critique of the Lightning Network Goes Viral

A business owner who runs a media company in Australia
and pays employees remotely in the Philippines has given his honest
opinion on what it’s like to use the Lightning Network (LN). Jason
Smith’s experience of attempting to use LN for payments was filled with
frustration. He reports that the fundamental structure of the offchain
solution is riddled with problems.

Also Read: Report: Lightning Network Still Way off Being Ready for Commercial Use

Australian Business Owner: ‘I Want to Pay Employees With Bitcoin — But There’s a Problem’

Over the last few years, people have been arguing relentlessly about
the Bitcoin scaling debate and proposed solutions. One of the most
controversial solutions for BTC’s transaction congestion and rising fees
is an offchain mechanism called the Lightning Network. LN has been
heralded by many BTC proponents even when it has been criticized for UX unfriendliness, centralization, and routing issues as they believe it is still a work in progress.

Much of the criticism directed towards the LN solution has been
because merchants find it difficult to use as connections fail or expire
quite often and funds need to be locked into channels. On Feb. 28,
business owner Jason Smith explained
to his Twitter followers that he runs a media company from Australia
and pays people in the Philippines to help with back end programming.
Smith detailed that he used BTC to pay them, but in 2017 fees got ridiculously high and he had to “completely write off the idea” of paying his staff with bitcoin during that time.

Smith’s tweetstorm went viral with more than 200 retweets and over 750 likes at the time of publication.

He then tried to utilize the LN to facilitate payments by using a
custodial LN application and Pierre Rochard’s node launcher. After
purchasing some stickers with LN he thought the solution might work, but
after winning some money on a betting site he hit a snag when he
couldn’t withdraw the money. This is because he needed incoming channels
connected to his node with funds on the other side.

“I eventually managed to find a service that would open up channels
back to me, (for a fee), and was able to receive money again — Then I
started trying to close some channels to get money back out of lightning
— God what a hassle,” Smith explained. He continued:

Now I’m told some of the Lightning problems
will be solved with certain developments but I assure you, the
fundamental structure of lightning doesn’t suit me at all for my
business — I want to pay my staff each month — Businesses can’t leave
money tied up in Lightning channels.

‘Lighting Is Not Easy to Use, Which Any Scaling Solution Needs to Be’

Smith also complained about BTC proponents who actually want high fees in order to drive the adoption of LN higher and showed his frustration for commentary like “bitcoin isn’t for poor people.”

Smith
is frustrated with the idea of custodial solutions. At the moment a
great majority of LN projects are custodial unless you are willing to
fire up a full node.

Of course, LN supporters didn’t care
for the criticism and claimed that the system would evolve. Lightning
Network Labs executive Elizabeth Stark explained
that it amazes her that “people think something won’t evolve.” Stark
compared Smith’s issues with people using computers back in the 70s. LN
supporter ‘Whale Panda’ felt like emphasizing
that Smith was “spreading a whole lot of misinformation” and added that
the LN is great for small payments and for everything else there are
onchain transactions. He further stated that when onchain fees rise
again, liquidity will come to LN, but Smith explained to Whale Panda
that his post wasn’t about liquidity.

Lightning
Network Labs executive Elizabeth Stark believes that the LN protocol
will eventually evolve. Bitcoin Cash (BCH) lead developer Amuary Sechet
thinks that Stark’s view is short-sighted.

The Australian business operator said
he believes one of two things will happen with BTC: everyone is forced
to use custodial services or BTC will adopt bigger blocks. “If we go
custodial, the game is fucked but if we get big blocks, we can actually
use this thing,” Smith remarked. By and large, the statement caused a
meaningful discussion about using the LN as a solution to high network
fees. Smith says the LN is difficult for the average merchant and
consumer and he’s taking a break until something gives.

“I also run bitcoin training seminars
about bitcoin and I won’t be running anymore until I can actually see
where this thing is heading — This high fee bullshit makes the network
unusable for normal people, and lightning is not easy to use, which any
scaling solution needs to be,” Smith concluded.

Love the content you are sharing! Will you share it on Uptrennd too?

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Great video man, make a video about the @casa node for the Bitcoin lightning network, show people how easy it is to use ! Just plug and play.

Lightning will be ready in 18 months!

All the smartest dev talent is working on this. The few decent alt coin developers are evening moving to Bitcoin and Lightning

There is a massive amount of creative entrepreneurs and developers building all kinds of things in the Lightning Networks ecosystem. A lot of new investment has come into the space and it’s gaining momentum…all this despite the price being a bear market.

Also VISA transactions take weeks to confirm. Bitcoin takes 10 minutes to confirm.

The Lightning Network provides no benefit than what can be gotten by using gift cards purchased with Bitcoin. Suppose, for example, that I buy a $50 Starbucks gift card with $50 worth of Bitcoin. I would get an immediate 3% rebate from the gift card company. I would also get as many "off chain" transactions at Starbucks as my balance and my spending enable. If I bought their "tall" regular coffee at $2.08 per then I would be able to do 23 coffee purchases from the one Bitcoin transaction that got me the gift card. This functionality has been available for years so I see no excuse for the Lightning Network fiasco! And it takes only a handful of gift card companies to accept Bitcoin to enable me to buy from hundreds of merchants which is a heck of a lot easier than getting hundreds of merchants to create lightning network channels. So the scoreboard reads over 200 merchants (such as Walmart, Bestbuy, Staples. etc) available at the gift card companies and none (not any name brand anyway) using LN.

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Hi Quinten, Is HashGraph not a better system ? Can it take over by the Hedera network ?

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Good stuff Q Man. Keep up the good work. Soon come we will see btc double overnight

Thanks for the content! Imo i don’t think Bitcoin needs to be used to buy a cup of coffee, it’s more like a store of value with similar characteristics as gold, however if lighting network solves the issues you mention, it’s still useful to improve the Btc usability ??